A full-time exempt employee is someone who works full-time hours and is exempt from certain state and federal wage and hour requirements, such as overtime and the minimum wage. To be full-time, you must work at least a certain number of hours. To be an exempt employee, you must meet job duties and salary requirements set by state or federal law.
What is a full-time employee?
To many people’s surprise, federal employment law does not define what it means to work “full-time.” Some federal entitlement programs require “full-time work,” but they put different numbers on what that means. State employment laws may have a more reliable definition of full-time work. Where state law is silent as well, it is up to employers to define what it means to be a full-time employee.
Federal laws
The main federal law for employment issues is the Fair Labor Standards Act (FLSA).[1] However, it is silent on what constitutes full-time employment. It also does not adopt a 40-hour workweek.
2 other federal laws provide employee benefits to full-time workers:
- The Affordable Care Act (ACA), and
- The Employee Retirement Income Security Act (ERISA).
The ACA, also known as Obamacare, requires all employers with 50 or more full-time employees to offer them healthcare benefits. It defines “full-time employee” as someone who works more than 30 hours in a workweek.[2]
ERISA makes you eligible to participate in employer-provided retirement plans if you work full-time. However, ERISA defines “full-time employment” as 1,000 hours in a year, which is slightly more than 19.5 hours in a week.[3]
State laws
Some states have employment laws that do define “full-time work.”
In Illinois, for example, a full-time employee is someone who works at least 35 hours in a week.[4] In Oregon, meanwhile, full-time work is generally 40 hours per week.[5]
Many states, however, do not have a law defining the term. Some of these states are:
- Arizona,
- Massachusetts,
- Missouri, and
- New York.
In these states, employers get to define who is a part-time employee and who is full-time. The difference can determine what worker benefits you are entitled to.
What is the difference between exempt vs. nonexempt employees?
An exempt employee is not protected by state or federal wage and hour rules. Nonexempt employees are protected by them.
Those wage and hour laws entitle workers covered by them to:
Because exempt employees are exempted from these protections, they cannot benefit from them. Most importantly, this means that exempt employees cannot get FLSA overtime hours for any extra hours that they work. Instead, these salaried employees continue to get paid their regular rate of pay. Nonexempt, hourly employees would receive 1.5, or one-and-one-half times, their normal hourly wage or hourly rate.
What is an exempt employee?
In order to be an exempt employee, you must:
- make at least a certain amount of money in salary, and
- pass the job duties test.
Because exempt employees have fewer legal protections, employers frequently misclassify their workers as exempt. This way, they can get away with not having to pay overtime wages for extra hours worked. They can also get more work done during rest or meal breaks.
If your employer is misclassifying you, you can file a misclassification lawsuit.
Salary requirements
Federal labor laws require workers to be paid at least a certain amount in order to be classified as exempt. Some states require higher amounts.
The FLSA allows workers to be exempt from minimum wage and overtime rules if they make enough money.[6] Regulations promulgated by the U.S. Department of Labor (DOL) for the FLSA set that amount. Starting in July of 2024, that amount is generally $844 per week, or $43,888 per year.[7]
In some areas it is lower. It is $455 per week, or $23,660 per year, in:
- Guam,
- Puerto Rico,
- the U.S. Virgin Islands, and
- the Northern Mariana Islands.[8]
It is $380 per week, or $19,760 per year in American Samoa.
Employers can use other forms of compensation to account for up to 10 percent of this required amount. Those other forms of compensation can be:
- commission pay,
- nondiscretionary bonuses, and
- other incentive payments.[9]
The FLSA’s threshold amount is a sharp increase from prior regulations. Before 2020, the FLSA only required exempt workers to make $455 per week, or $23,660 per year on a salary basis.[10]
The FLSA’s salary requirement is only a minimum. States can require higher salary amounts for exemption under state employment laws.
Job duties
To be classified as exempt, you must have job duties that meet legal requirements. Importantly, it is the nature of the work that matters; job titles do not make you exempt or nonexempt.[11]
The most common types of jobs that are exempt from the protections of the federal FLSA are white-collar jobs that fall under the:
- executive exemption,
- administrative exemption, or
- professional exemption.
To fall in the executive exemption category, your primary job duties must involve:
- managing your employer’s enterprise or a department or subdivision within it,
- customarily and regularly directing the work of at least 2 full-time employees, and
- the authority to hire or fire other employees, or at least some influence to do so.[12]
The administrative exemption is for employees whose primary job duties are:
- performing office or non-manual work that is directly related to the employer’s general business operations, and
- exercising discretion and independent judgment on significant issues.[13]
Examples of administrative workers include:
- insurance claims adjusters,
- executive assistants, and
- purchasing agents.[14]
You could be in the professional exemption if your primary job duties require:
- knowledge of an advanced type that is typically obtained through extensive education, or
- invention, originality, talent, or imagination in a recognized field of creativity.[15]
Some examples of professional employees who fall into this exemption include:
- nurses,
- dental hygienists,
- accountants, and
- funeral directors.[16]
Some other types of exempt positions are the:
- computer professional exemption,
- highly compensated employees exemption, and
- outside sales employees and other salespeople.
Manual laborers and other “blue collar” workers, on the other hand, are nonexempt workers. These are people who:
- perform manual and repetitive operations, and
- gain the skills and knowledge required for their job through apprenticeships and on-the-job training.[17]
What is the law in California?
California has state laws that differ from the FLSA by:
- defining what “full-time employment” means, and
- increasing the minimum salary level to be considered an exempt worker.
Each of these differences provides stronger protections to workers in the state.
Full-time work
California Labor Code 515 LAB states that full-time employment is 40 hours per week.[18] If you work this many hours in a week, you may be entitled to additional workplace benefits.
Higher salary requirements for exemption
California law generally requires you to make at least 2 times the applicable minimum wage in order to be classified as exempt.[19] Because California exceeds the federal minimum wage, this means that, as of January 2024, your annual salary must be at least $66,560 to meet the requirements of an exempt status.
[1] 29 USC 201 et seq.
[2] 79 Fed. Reg. 8581 (Feb. 12, 2014).
[3] 29 CFR 1052.
[4] 35 ILCS 25/10.
[5] Oregon Administrative Rule 471-030-0022.
[6] 29 USC 213(a)(1).
[7] See 29 CFR Part 541 and 84 FR 51230.
[8] 29 CFR Part 541.
[9] 29 CFR 541.602(a)(3).
[10] See 84 FR 51230.
[11] 29 CFR 541.2.
[12] 29 CFR 541.100-106.
[13] 29 CFR 541.200-204.
[14] 29 CFR 541.203.
[15] 29 CFR 541.300-304.
[16] 29 CFR 541.301(e).
[17] 29 CFR 541.3(a).
[18] California Labor Code 515(c) LAB.
[19] California Labor Code 515(a) LAB.
